January 08, 2004

Scaling back the goals at Skype?

Skype co-founder Niklas Zennstrom recently gave an interview to BusinessWeek. For me each interview gives more information on their plans and I should say each is progressively scaled back version of the previous one, thereby eliminating conflicting statements in the previous interview. This interview is no exception.

Other VoIP service providers are similar to regular telephone service providers, because they are “using the PSTN”. Huh? Another flaw in these companies’s business model is that they have huge cost associated with customer acquisition and billing. Skype on the other hand incurs zero cost for customer acquisition and of course zero operational cost. So how are they going to make money? They will make money by offering premium services like voice mail and conferencing. Mind you these are subscriptions (unlike Vonage didn’t you know), so the operational costs are low.

One piece of information that I could infer is that both voice mail and conferencing will be software-based features. So there could only be one time licensing fee.

Skype does not anticipate that it will replace the PSTN completely. It will coexist just as Fax and email complement each other. This is a refreshingly a realistic view not shared by some of the other VoIP providers.

Posted by aswath at January 8, 2004 12:43 PM
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